July 10,2012 : PLENTY OF BUYERS FOR ONGAME, SAYS BWIN.PARTY
Online gambling group issues pre-close trading update
Bwin.Party digital entertainment plc issued a trading update Tuesday, claiming that there is no shortage of buyers interested in Ongame after Shufflemaster pulled out of an acquisition deal recently
The company highlighted:
• Top three market position secured in Spain following launch of .es sites
• First social gaming products launched
• Integration of .com platforms on-track to complete during H2 2012
• Buy-back completed; Euro 100 million returned to shareholders in last year
• Several parties interested in acquiring Ongame
• Trading in the second quarter was broadly in line with expectations; solid performances in casino and bingo offset by continued pressures in poker and a lower than expected gross win margin in sports betting
• Clean EBITDA margins in the first half likely to be slightly ahead of expectations
The online gambling group’s trading performance since the beginning of April 2012 was broadly in line with expectations, with solid performances in casino and bingo offset by continued pressures in poker and a lower than expected gross win margin in sports betting, Management reported.
While certain southern European markets remain challenging, the launch of the group’s sports, poker, casino and bingo products in Spain went live on 5 June 2012 and early performance has been encouraging, with a top three market position secured.
In sports betting, although the Euro 2012 Championship delivered a meaningful uplift in betting activity and customer numbers, gross win margins were lower than expected due to the majority of results following the predicted path.
Casino performed in-line with the normal seasonal trends, but in poker, as has been the experience of many other operators, the competitive challenges experienced in April continued in May and June, exacerbated by the Euro 2012 Championship and the launch of Zoom Poker on PokerStars. Bingo performed better than expected and group's new Binguez brand launched into the Spanish market.
Bwin Party management expects that additional gaming taxes in Germany and the company's investment in social gaming initiatives will impact its performance in the second half.
"While we expect a recovery in sports gross win margin and an improvement in poker, following the integration of our liquidity pools during the second half and the launch of our own version of fast poker, the new federal tax on sports betting in Germany is expected to result in an additional impact to the group’s full year clean EBITDA of approximately Euro 5-10 million in the current year," a spokesman said.
The trading updates included notes on the current regulatory issues facing the company, commenting that Germany's state parliaments have ratified the new State Lottery Treaty, which Bwin Party believes to conflict with EU law. Restricted licensing is expected to be in place during the autumn of 2012.
The update also draws attention to the new federal German tax of 5 percent on turnover applied to all forms of sports betting in Germany since July 1st, and commits to paying this tax on its German revenues.
In Italy, the group looks forward to increased revenues flowing from online slot machine operations, which will be permitted from December this year.
The situation in the United States is examined, with emphasis on internet gambling advances in Nevada, Delaware and New Jersey. "We remain encouraged by these developments and continue to believe that federal online gaming regulation remains the preferred solution," the update notes.
On the operational front, integration of online poker activity within the group continues, with the goal of achieving Euro 65 million in annualised synergies next year.
During June, a new sports betting portal for mobile was launched, offering a much improved interface with graphics that have been tailored for smartphone technology; and in social gaming, the company has beta-launched its first social gaming products called Poker Friends and Spinning Heads; and a new Mac download client for PartyPoker.com.
Bwin Party elaborates on the current situation with Ongame following the withdrawal of Shufflemaster from an acquisition agreement earlier this year.
Management reveals that six potential purchasers have expressed an interest in acquiring Ongame, and undertakes to deliver further updates in due course.